On August 14, 2018 the 5th Circuit upheld the Tax Court’s September 9, 2016 bench opinion in PBBM-Rose Hill, LTD v. Comm’r. The case involved a $15,160,000 conservation easement deduction under IRC § 170(h) that was denied based on a technicality relating to strict compliance with the extinguishment regulations under Treas. Reg. § 1.170A-14(g)(6)(i) and a rejection of…
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Where does your trust reside? Does it reside in more than one state? Does it reside nowhere? What are the implications of a trust’s residence? One important implication is how the trust will be taxed for state income tax purposes. With a varied approach to the income taxation of trusts among the states, it is…
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Background The traditional estate planning game has been to: (1) ensure client wishes were achieved by drafting wills and trusts such that the assets within the client’s estate served the intended purposes and landed in the hands of the desired beneficiaries, and (2) minimize or eliminate estate (and generation skipping) taxes. Since 2000, a few…
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The Internal Revenue Service recently released the Applicable Federal Rates (“AFR”) and the Section 7520 rate (“7520”) for August 2018. While the AFR remains low from a historical standpoint, as do interest rates in general, there has been a recent trend of rising interest rates. The short term AFR has increased from .56% for August 2016…
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BACKGROUND THE PARTIES On July 2nd, 2018, the Tax Court released its ruling in Roy E. Hahn, et al. v. Comm’r, TC Memo 2018-100. The case revolved around whether the taxpayers were entitled to deduct certain losses from a Custom Adjustable Rate Debt Structure (CARDS) transaction. The primary reason for this article is not to…
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Donors of conservation easements have just been put on notice by the Tax Court. Frequently, donors of conservation easements (or related parties) own nearby property. The Tax Court recently denied a deduction for a conservation easement where, without any expert opinion, it determined there was an expectation that contiguous property would increase in value. It…
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In a case with some very interesting legal issues (at least “the kind of conundrum only tax lawyers love”), the IRS is denied penalties for failing to produce the signature of a supervisor. The Tax court gave an early Christmas present to a handful of taxpayers including the Estate of Michael Jackson and Warren Sapp (consolidated…
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Yet again, a taxpayer loses for not properly and contemporaneously documenting his intentions. Here is another lesson on the importance of properly documenting loans (i.e. don’t just “book” as loans but have written loan documents contemporaneous with the advance). Mr. Burke made a number of advances to a business operated by his friend. Although the…
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